EUROPE MARKETS: Strong Chinese Data Lift European Markets

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets ended higher on Monday as investors welcomed upbeat data on Chinese industrial production and focused on corporate news, with shares of Lonmin PLC rallying after a well-received earnings report.

The Stoxx Europe 600 index gained 0.3% to close at 323.57, after posting on Friday the largest five-week point gain since the week ending Aug. 9.

"Today has been really quiet and from a macro perspective we're still digesting last week's strong [U.S. jobs] numbers to give us some idea about where we'll go next," said Peter Dixon, strategist at Commerzbank. "It gives some hope that the U.S. economy is on a solid footing, but equally strong data bring forward the date when the [Federal Reserve] is likely to taper."

"The earnings season [in Europe] to be fair hasn't been great and about half of the companies missed their estimates. It's been mixed, so there's no real reason why you want to push equities higher in this environment," he added.

Among notable movers in the pan-European index, shares of RSA Insurance Group PLC slid 10.5% after the company late Friday issued a profit warning for the full year and said it had suspended the chief executive and chief financial officer of its Irish division, as it investigates issues that were identified during a routine audit. Credit Suisse cut the insurance firm to underperform from neutral following the announcement of problems with the Irish business.

BT Group PLC added 0.5% after the telecom and broadband provider bought the rights to broadcast live Champions League and Europa League soccer matches for 897 million pounds ($1.4 billion). The rights are currently held by rivals British Sky Broadcasting Group PLC , whose shares fell 10.9%, and ITV PLC , whose fell 1.6%. Citigroup said ITV is probably the bigger casualty of BT's rights acquisition and lowered the rating to neutral from buy. Meanwhile, Nomura cut BSkyB to reduce from buy.

Shares of Lonmin PLC gained 3.9% after the platinum miner said it swung to profit for the full year as it recovered from the effects of a violent strike last year.

China data

More broadly, investors were inspired to take on more risk after data over the weekend showed industrial production in China rose 10.3% in October, beating expectations and coming in higher than the 10.2% rate printed in September.

"The industrial production data so far suggest that GDP growth in [the fourth quarter] will accelerate slightly to 7.9% year-on-year from 7.8% year-on-year in [the third quarter]," analysts at Danske Bank said in a note.

"The current moderate recovery in China has primarily been driven by domestic investment demand and to some degree stronger exports. Manufacturing investments have strengthened in recent months, while there are tentative signs that growth in public infrastructure investment is easing," they added.

The optimism over the Chinese numbers was, however, partly offset by worries that the U.S. Federal Reserve could begin to taper its asset purchases sooner than previously expected after a solid nonfarm-payrolls report on Friday. Data from the Labor Department showed 204,000 jobs were added to the economy in October, beating expectations of a 100,000 increase.

U.S. stocks traded higher on Monday, while Asian markets closed mixed.

The U.K.'s FTSE 100 index rose 0.3% to 6,728.37, while France's CAC 40 index added 0.7% to 4,290.14. Germany's DAX 30 index picked up 0.3% to 9,107.86.

Shares of Shire climbed 0.9% in London after the drug maker said it is buying rare-disease company ViroPharma Inc. (VPHM) for $4.2 billion, or $50 a share. ViroPharma shares traded 26% higher in the U.S.

In Spain, shares of Grifols SA jumped 4.5% after Novartis AG (NVS) agreed to sell its blood-transfusion diagnostics unit to the Spanish firm for $1.675 billion in cash. Novartis shares rose 0.9%.

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